IMF Gold and the World Bank's Unfunded HIPC Deficit

The World Bank is to forgive $12.24 billion in IDA debt payments from HIPC borrowers. It has received $1 billion from the HIPC Trust Fund to help offset these losses, but still has a $11.6 billion unfunded liability. The IMF has gold worth $38 billion on hand for which it has no actual use. This article proposes that a small portion of IMF gold be sold annually, just enough to offset IDA's annual HIPC deficit, over the next twenty years. The new money would be additional and predictable, and would eliminate the prospect that IDA would have to cut back its future flow of aid because the HIPC programme had drained its resources.     

The economic toll of intimate partner violence against women in the United States

This study provides estimates of the economic cost of intimate partner violence perpetrated against women in the US, including expenditures for medical care and mental health services, and lost productivity from injury and premature death. The analysis uses national survey data, including the National Violence Against Women Survey and the Medical Expenditure Panel Survey, to estimate costs for 1995. Intimate partner violence against women cost $5.8 billion dollars (95% confidence interval: $3.9 to $7.7 billion) in 1995, including $320 million ($136 to $503 million) for rapes, $4.2 billion ($2.4 to $6.1 billion) for physical assault, $342 million ($235 to $449 million) for stalking, and $893 million ($840 to $946 million) for murders. Updated to 2003 dollars, costs would total over $8.3 billion. Intimate partner violence is costly in the US. The potential savings from efforts to reduce this violence are substantial. More comprehensive data are needed to refine cost estimates and monitor costs over time.     

Making Child Care "Affordable" in the United States

Two alternative federally financed plans are presented as modelsfor a program which would make child care of acceptable quality"affordable" for millions of American families. Taking a cuefrom currently operating state programs, care is defined as"affordable" if it costs parents no more than 30 percent ofthe amount by which their income exceeds the poverty line. Thefirst plan would cost the government $25 billion per year andwould concentrate help on families with incomes up to twicethe poverty line. The second would cost $39 billion per year,would provide higher quality care, and would allow all UnitedStates families to have access to care that was "affordable"by our definition. Costs of these magnitudes preclude financingof any significant part by employers or philanthropies. Whilesome government savings might result from the beneficial effectsof these programs, the main rationale for them rests, not onthe calculation that they will save the government money (althoughthey might), but on the fact that they will prevent considerablemisery to children and their families. Making quality childcare affordable to all families would result in safer, moreeducational, and more enjoyable care for children, and wouldgive a financial boost to families pitifully short of resourcesin a non-stigmatizing way. It would reduce child poverty andreduce enrollment in welfare-type programs. It would also giveparents a chance to particiopate in the world of work and toachieve the gains in resources and status that such a participationwould alllow.     

Impacts of Long-Range Increases in the Fuel Economy (CAFE) Standard

This work models the impact of higher CAFE standards on producer and consumer welfare, gasoline consumption, externalities from increased driving, and the emissions of traditional pollutants. In particular, a long-run 3.0 MPG increase in the CAFE standard is estimated to impose welfare losses of about $4 billion per year and save about 5.2 billion gallons of gasoline per year, for a hidden tax of $0.78 per gallon conserved. An 11-cent-per-gallon increase in the gasoline tax would save the same amount of fuel at a welfare cost of about $290 million per year, or about one-fourteenth the cost. (JEL L51 , Q30 )     

NASADAD pushes block‐grant increase for stimulus 4 bill

The National Association of State Alcohol and Drug Abuse Directors (NASADAD) last week wrote to Sen. Patty Murray (D‐ Washington) and Sen. Roy Blunt (R‐Missouri), the Senate co‐chairs of the Labor, Health and Human Services (HHS), Education, and Related Agencies Appropriations Subcommittee, asking specifically for the $1.5 billion in supplemental funding as provided by the House in the HEROES Act for the Substance Abuse Prevention and Treatment (SAPT) block grant (see “Proposed bill for HEROES Act would give $1.5 billion to SAPT block grant,” ADAW, May 18, https://onlinelibrary.wiley.com/doi/10.1002/adaw.32722 ).     

Health savings accounts and health reimbursement arrangements: assets, account balances, and rollovers, 2006-2011

ASSET LEVELS GROWING: In 2011, there was $12.4 billion in health savings accounts (HSAs) and health reimbursement arrangements (HRAs), spread across 8.4 million accounts, according to data from the 2011 EBRI/MGA Consumer Engagement in Health Care Survey, sponsored by EBRI and Matthew Greenwald & Associates. This is up from 2006, when there were 1.3 million accounts with $873.4 million in assets, and 2010, when 5.4 million accounts held $7.3 billion in assets. AFTER LEVELING OFF, AVERAGE ACCOUNT BALANCES INCREASED: After average account balances leveled off in 2008 and 2009, and fell slightly in 2010, they increased in 2011. In 2006, account balances averaged $696. They increased to $1,320 in 2007, a 90 percent increase. Account balances averaged $1,356 in 2008 and $1,419 in 2009, 3 percent and 5 percent increases, respectively. In 2010, average account balances fell to $1,355, down 4.5 percent from the previous year. In 2011, average account balances increased to $1,470, a 9 percent increase from 2010. TOTAL AND AVERAGE ROLLOVERS INCREASE: After declining to $1,029 in 2010, average rollover amounts increased to $1,208 in 2011. Total assets being rolled over increased as well: $6.7 billion was rolled over in 2011, up from $3.7 billion in 2010. The percentage of individuals without a rollover remained at 13 percent in 2011. HEALTHY BEHAVIOR DOES NOT MEAN HIGHER ACCOUNT BALANCES AND HIGHER ROLLOVERS: Individuals who smoke have more money in their accounts than those who do not smoke. In contrast, obese individuals have less money in their account than the nonobese. There is very little difference in account balances by level of exercise. Very small differences were found in account balances and rollover amounts between individuals who used cost or quality information, compared with those who did not use such information. However, next to no relationship was found between either account balance or rollover amounts and various cost-conscious behaviors. When a difference was found, those exhibiting the cost-conscious behavior were found to have lower account balances and rollover amounts. DIFFERENCES IN ACCOUNT BALANCES: Men have higher account balances than women, older individuals have higher account balances than younger ones, account balances increase with household income, and education has a significant impact on account balances independent of income and other variables. DIFFERENCES IN ROLLOVER AMOUNTS: Men rolled over more money than women, and older individuals had higher rollover amounts than younger individuals. Rollover amounts increase with household income and education, and individuals with single coverage rolled over a slightly higher amount than those with family coverage.     

Health savings accounts and health reimbursement arrangements: assets, account balances, and rollovers, 2006-2010

ASSET LEVELS GROWING: In 2010, there was $7.7 billion in health savings accounts (HSAs) and health reimbursement arrangements (HRAs), spread across 5.7 million accounts. This is up from 2006, when there were 1.2 million accounts with $835.4 million in assets, and 2009, when 5 million accounts held $7.1 billion in assets. AFTER LEVELING OFF, AVERAGE ACCOUNT BALANCE DROPS SLIGHTLY: Increases in average account balances leveled off in 2008 and 2009, and fell slightly in 2010. In 2006, account balances averaged $696. They increased to $1,320 in 2007, a 90 percent increase. Account balances averaged $1,356 in 2008 and $1,419 in 2009, 3 percent and 5 percent increases, respectively. In 2010, average account balances fell to $1,355, down 4.5 percent from the previous year. AVERAGE ROLLOVER DECLINES, WHILE TOTAL ROLLOVERS INCREASE: Despite a decline in the average rollover amount in 2010, total assets being rolled over have been increasing. $4.2 billion was rolled over in 2010, up from $4 billion in 2009. The average rollover increased from $592 in 2006 to $1,295 in 2009, and fell to $1,029 in 2010. The percentage of individuals without a rollover decreased from 23 percent in 2006 to 10 percent in 2009 and increased slightly to 13 percent in 2010. HEALTHY BEHAVIOR MEANS HIGHER ACCOUNT BALANCES AND HIGHER ROLLOVERS: Individuals who exercised, those who did not smoke, and those who were not obese had higher account balances and higher rollovers than those with less healthy behaviors. It was also found that individuals who used cost or quality information had higher account balances and higher rollovers compared with those who did not use such information. However, no relationship was found between either account balance or rollover amounts and various cost-conscious behaviors such as checking pricing before getting services or asking for generic drugs instead of brand names, among other things. DIFFERENCES IN ACCOUNT BALANCES: Men have higher account balances than women, older individuals have higher account balances than younger ones, account balances increase with household income, and education has a significant impact on account balances independent of income and other variables. DIFFERENCES IN ROLLOVER AMOUNTS: Men rolled over more money than women, and older individuals had higher rollover amounts than younger individuals. Rollover amounts increase with household income and education, and individuals with single coverage rolled over a higher amount than those with family coverage.     

Medical tourism: reverse subsidy for the elite

The medical tourism sector in India has attracted global attention, given its phenomenal growth in the past decade. India is second only to Thailand in the number of medical tourists that it attracts every year. Estimates indicate that the medical tourism market in India could grow from $310 million in 2005 to $2 billion by 2012. These figures are significant when contrasted with India's overall health care expenditure - $10 billion in the public sector and $50 billion in the private sector. Factors that have contributed to this growth include the relative proficiency in English among health care providers and the cost effectiveness of medical procedures in India. Generally, most procedures in Indian hospitals cost a quarter (or less) of what they would cost in developed countries. The expansion of medical tourism has also been fueled by the growth of the private medical sector in India, a consequence of the neglect of public health by the government. India has one of the poorest records in the world regarding public financing and provisioning of health care. A growing driver of medical tourism is the attraction of facilities in India that offer access to assisted reproductive care technologies. Ironically, this is in sharp contrast with the acute neglect of the health care needs of Indian women. The Indian government is vigorously promoting medical tourism by providing tax concessions and by creating an environment enabling it to thrive. However, there is a distinct disjunction between the neglect of the health care needs of ordinary Indians and public policy that today subsidizes the health care of wealthy foreigners.     

A new evaluation of impacts of prevailing wage law repeal

A recent academic study claims that repeal of the Davis-Bacon Act, the federal prevailing wage law covering construction of public works, would cost more in lost taxes than could be recovered in lower construction expenditures and would also result in an increased number of construction injuries and deaths. Those claims are not supported by the facts. Indeed, the opposite is true. The facts support savings to the federal government from repeal of Davis-Bacon in excess of $1.5 billion annually, and, if anything, a lower rather than a higher frequency of construction injuries. Furthermore, states still having prevailing wage laws would also realize significant savings from repeal. Aggregate savings from eliminating all prevailing wage laws could exceed $4 billion a year. The author gratefully acknowledges the assistance of David Denholm, President, Public Service Research Council, and Derrick Max, Staff Economist, U.S. House of Representatives, in finding sources of data and helping structure this paper, and of Dr. Herbert R. Northrup, Professor Emeritus, University of Pennsylvania, for his guidance and advice.     

What does $8 billion for coronavirus say about opioid funding?

Last week, Congress gave $8 billion to the fight against coronavirus, seemingly overnight. Certainly, compared to the extra $2 billion a year for addressing the opioid epidemic, the money came much faster. It took years for the State Targeted Response to the Opioid Crisis (STR) grant to be included, as it was in the Cures Act passed by Congress in 2016 and signed into law by President Obama in December of that year. The State Opioid Response (SOR) grants continue. How did the coronavirus $8 billion — $6 billion more than the White House had asked for — materialize so quickly? We asked two Capitol Hill experts.     

The Crisis in Retiree Health Benefits

Over 7 million retirees currently are covered by employer-sponsored health benefits plans in which the employer contributes all or a portion of the premium cost. Almost one-third of these retirees are under age 65 and therefore lack Medicare coverage. The annual cost to employers for this coverage is now $9 billion and is expected to be $22 billion in 20 years. However, inflation in health care costs, recent court decisions, the aging of America, and a major proposed accounting rule change by the Financial Accounting Standards Board have combined to produce a "crisis in retiree health benefits" in the business sector. As a result, employers are rapidly redesigning retiree benefit plans to shift future health care cost increases to their retirees. Until now, the aging network has been largely oblivious to this transformation in financing. Yet, this "crisis" begs for public/private sector dialogue and partnership, and the White House Conference on Aging could be a major forum for this dialogue.     

ABORTION AND CRIME: UNWANTED CHILDREN AND OUT-OF-WEDLOCK BIRTHS

Legalizing abortion can either increase or decrease investments in children's human capital. This article finds that abortion increases the number of out-of-wedlock births. Using data that more directly links the criminal with age when the crime was committed, not age when arrested, and fixing the assumption in previous research that no abortions took place prior to the Roe v. Wade decision in the 45 states affected by that decision, we find consistent significant evidence that legalizing abortions increased murders by over 7%. Linear estimates indicate that legalization increased total annual victimization costs by at least $3.2 billion. ( JEL K42, K14, J24)     

The social costs of child abuse in Japan

The present study calculates the social costs of child abuse in Japan. The items calculated included the direct costs of dealing with abuse and the indirect costs related to long-term damage from abuse during the fiscal year 2012 (April 1, 2012, to March 31, 2013). Based on previous studies on the social costs of child abuse and peripheral matters conducted in other countries, the present study created items for the estimable direct costs and indirect costs of child abuse, and calculated the cost of each item. Among indirect costs, future losses owing to child abuse were calculated using extra costs with a discount rate of 3%. The social cost of child abuse in Japan in the fiscal year 2012 was at least ¥1.6 trillion ($16 billion). The direct costs totaled ¥99 billion ($1 billion), and the indirect costs totaled ¥1.5 trillion ($15 billion). This sum of ¥1.6 trillion for only the year 2012 is almost equal to the total amount of damages of ¥1.9 trillion caused by the 2011 Tohoku Earthquake and Tsunami in Fukushima Prefecture. Moreover, abuse is a serious problem that occurs every year and has recurring costs, unlike a natural calamity. However, Japan has no system for calculating the long-term effects of abuse. Therefore, owing to the scarcity of data, the calculations in the present study may underestimate the true costs.     

THE WELFARE COST OF THE UNDERGROUND ECONOMY

This paper estimates the welfare cost of taxes that create an incentive for resources to flow to the underground, or untaxed, sector in the United States. Using a general equilibrium model of the American economy, the welfare cost is found to be large and growing in absolute and relative terms over time. In 1980 the welfare cost may be as much as $220 billion, or over 9 percent of output; even conservative estimates place the loss at nearly $100 billion. It also is found that small reductions in tax rates substantially reduce the welfare cost.     

The minimum wage and poverty among full-time workers

V. Conclusions The empirical evidence is strong that minimum wages have had little or no effect on poverty in the U.S. Indeed, the evidence is stronger that minimum wages occasionally increase poverty. It also suggests that the minimum wage does not even lower poverty for the one group that, almost by definition, one would expect to be helped: full-time, year-round workers. While the empirical results suggest minimum wages do not achieve what is ostensibly their primary goal — relieving poverty among the working poor — minimum wages do seem to impose a real cost on society in terms of lost income and output. The empirical evidence on work hours suggests that a $1 increase in the minimum wage, far from being almost costless, could conceivably impose income losses to American workers in the $12-15 billion range per year — an amount equal to the “income deficit” of millions of persons counted as poor by the U.S. Bureau of the Census.     

Occupational licensing in a “competitive” labor market: The case of cosmetology

A straightforward model of supply and demand is developed to analyze the regulation of a “Competitive “ industry —cosmetology —with demand shifts representing an enhancement of “quality “ and supply shifts representing restricted entry. Reducedform models are established to estimate both price and quantity shifts, adjusted for the joint determination of cosmetological prices, quantities, and state regulations. Our results reveal a significant net decrease in quantity from the imposition of state occupational regulation in the cosmetology market. Rents to cosmetologists would be on the order of $1.7 billion per year with deadweight losses totaling an additional $111 million per annum under reasonable and conservative assumptions. We are grateful to Richard Ault, Dave Kaserman, Mark Thornton, Dave Saurman, Bob Tollison, Henry Thompson, and Pete Calcagno for helpful comments on earlier drafts. Special thanks are due to Carter Hill for his advice. We are responsible for any errors.     

OPTIMAL BAIL AND THE VALUE OF FREEDOM: EVIDENCE FROM THE PHILADELPHIA BAIL EXPERIMENT

This article performs a cost‐benefit analysis to determine socially optimal bail levels for felony defendants. We consider jailing costs, the cost of lost freedom to incarcerated defendants, and the social costs of flight and new crimes committed by released defendants. We estimate the effects of changing bail using data from a randomized experiment. We find that the typical defendant in our sample would be willing to pay roughly $1,000 for 90 d of freedom. While imprecise, our optimal bail estimates are similar to the observed levels of bail prior to bail reform. (JEL J17, J19, K14, K42)     

The lifetime economic and social costs of child maltreatment in Australia

A cost of illness (COI) study was undertaken to estimate the magnitude and range of lifetime effects associated with child maltreatment in Australia, using an incidence-based approach. Costs were primarily estimated through calculation of population attributable fractions (PAFs) to determine the marginal effects of child maltreatment on a range of outcomes. PAFs were then applied to estimates of expenditure, inflated to 2014–15 Australian dollars, projected over the life course, according to a baseline age of incident cases for child maltreatment in 2012–13, and discounted at 7% per annum. Sensitivity analysis was conducted using a best and lower bound estimate of incidence of child abuse. The best estimate of the total estimated lifetime financial costs for incident cases of child maltreatment in 2012–13 was $9.3 billion (a cost per child maltreated of $176,437), with a lower bound of $5.8 billion. The best estimate of lifetime costs associated with reduced quality of life and premature mortality (non-financial costs) for all incident cases of child maltreatment in 2012–13 was $17.4 billion, or $328,757 per child maltreated. The considerable lifetime costs associated with child maltreatment warrants an expansion of existing investment in primary and secondary prevention and targeted support services for children and families at risk.